Article

# An Economic Theory of Clusters

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## Abstract

This paper investigates the impact of localization economies on firms' locations. It is known that such external effects lead to substantial cost reductions when firms are located together. However, when they are agglomerated, firms also face the prospects of tough price competition whose intensity can be relaxed through product differentiation. In addition, their access to isolated markets varies with the level of transport costs. As a result, there is a trade-off whose solution depends on the structural parameters of the economy. The market and optimal solutions are compared for the case of small and large groups of firms.

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... When the number of restaurants grows in an area within a city, this may attract more customers from other areas; while at the same time, a restaurant will have to compete with more rivals for the customers in this area. Belleflamme et al. (2000) state "when the firms in the same industry are agglomerated, they will have to face the prospects of tough price competition". This conclusion could also be applied to those facilities in the service industry. ...
... Moreover, Belleflamme et al. (2000)argue that the price competition can be relaxed through product differentiation. Generally speaking, the products or services are more differentiated in the restaurants, this could explain why the restaurants are more agglomerated than other types of facilities. ...
Article
Taylor's law is the footprint of ecosystems, which admits a power function relationship $S^{2}=am^{b}$ between the variance $S^{2}$ and mean number $m$ of organisms in an area. We examine the distribution of spatial coordinate data of seven urban facilities (beauty salons, banks, stadiums, schools, pharmacy, convenient stores and restaurants) in 37 major cities in China, and find that Taylor's law is validated among all 7 considered facilities, in the fashion that either all cities are combined together or each city is considered separately. Moreover, we find that the exponent $b$ falls between 1 and 2, which reveals that the distribution of urban facilities resembles that of the organisms in ecosystems. Furthermore, through decomposing the inverse of exponent $b$, we examine two different factors affecting\emph{ }the numbers of facilities in an area of a city respectively, which are the city-specific factor and the facility-specific factor. The city-specific factor reflects the overall density of all the facilities in a city, while the facility-specific factor indicates the overall aggregation level of each type of facility in all the cities. For example, Beijing ranks the first in the overall density, while restaurant tops the overall aggregation level.
... As Belleflamme et al. (2000) contend that, it is a well-established fact in urban economics that firms belonging to the same sector benefit from an increase in "productive efficiency" when they locate together. We should also note that while a large number of studies have documented the positive externalities stemming from agglomeration economies (Chung and Kalnins;2001, for instance), there does not seem to be a consensus regarding the effects of clusters on competition, or "allocative efficiency". ...
... We should also note that while a large number of studies have documented the positive externalities stemming from agglomeration economies (Chung and Kalnins;2001, for instance), there does not seem to be a consensus regarding the effects of clusters on competition, or "allocative efficiency". While one might expect increased price competition (consumers can more easily compare prices) and a decline in rents through geographical proximity, firms in the cluster might prevent competition through collusion (Labrecciosa and Colombo;2010) or through product differentiation (Belleflamme et al. 2000 In this paper, we empirically test the effects of clusters on productive and allocative efficiency by using a novel dataset that includes 155 Turkish firms from different industries regarding the 2005-2009 periods. The panel nature of our dataset allows us to control for unobserved heterogeneity. ...
Article
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By using a very novel dataset from Turkish SMEs, this paper investigates the effects of agglomeration economies on productive and allocative efficiency. After controlling for unobserved heterogeneity at the time level, our empirical results from ordered panel probit models provide evidence that clusters have no statistically significant effect on productive efficiency but a negative effect on allocative efficiency. We also show that the increase in prices is not due to increased product differentiation; therefore, it is most likely due to collusion.
... There is a broad discussion in the literature about the advantages of being located within a cluster. Several studies point out how firms benefit from the unique mix of collaboration and competition, as well as from complementary goods or technologies present in the region (Porter 1998(Porter , 2000Belleflamme et al. 2000). In their study on innovative activities in the UK, Baptista and Swann (1998), show that firms located in clusters (high regional employment in own sector) are more innovative. ...
Article
Full-text available
Cluster policies aim at improving collaboration between co-located actors to address systemic failures. As yet, cluster policy evaluations are mainly concerned with effects on firm performance. Some recent studies move to the system level by assessing how the structure of actor-based knowledge networks is affected by such policies. We continue in that direction and analyze how technology-based regional knowledge spaces are shaped by the introduction of a cluster policy. Taking the example of the German BioRegio contest, we examine how such knowledge spaces in winning and non-winning regions evolved before, during and after the policy. Using a difference-in-differences approach, we identify treatment effects of increased knowledge space embeddedness of biotechnology only in the post-treatment period. Our findings imply that cluster policies can have long-term structural effects typically not accounted for in policy evaluations.
... The geographic concentration of clusters contributes to developing additional financial benefits and technological externalities (Belleflamme et al., 2000). The rapid advances in information and communication technologies tend to develop virtual links between SMEs, contributing towards realizing collaborative relationships with trading partners and easing the virtual manufacturing processes (Chiu et al., 2006) thereby inferring that clusters do not necessarily have to be locally defined entities (Preissl and Solimene, 2003). ...
Chapter
Competitiveness has been a topic of research in the manufacturing and related sectors since the early 1990s. While there is much agreement on the economic and social importance of competitiveness, it is less clear what exactly competitiveness is and what its most important determinants are. The focus of this paper is to review the literature at the firm level and evaluate and compare all the available competitiveness-related frameworks and models, to present the empirical evidence and to investigate the relevant competitiveness indices.
... Today, the studies conducted on industrial clusters are being continued from different aspects, some of them are referred to as follows: To understand the concept of cluster in the research literature, different researchers (Porter (1998), Rosenfeld (1997), Unido (2000) conducted studies on cluster. Other researchers (Pouder and John (1996), Belleflamme (2000), Wolter (2003) explained and determined the effectiveness and geographic concentration of the enterprises with common industrial tendency on using external advantages and agglomeration economies. Preissl and Solimene (2003) and Chiuetal (2005) also studied the effect of information and communication technology on developing virtual communication between enterprises. ...
Article
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he small and medium-sized enterprises (SMEs), due to their inherent limitations and obstacles, do not have high productivity to participate in world class manufacturing (WCM). This has caused challenges and problems for them to attend global competitions. Organizing these enterprises into the form of industrial clusters would be one of the most important strategies to enable small and medium-sized enterprises to attend global competitions. By offering advantages for the enterprises within clusters, industrial cluster can play many roles to enable these enterprises. The present paper aims to study the role of industrial cluster to enable small and medium-sized enterprises to achieve a continuous competitive advantage in the fields such as quality, cost and flexibility (world class manufacturing). The effects of industrial cluster on the enterprises within that cluster can be divided into two general groups of structural factors (external advantages) and developmental factors. The structural factors are the effects and advantages – such as costs reduction, knowledge spillover, access to labor, etc-gained from the activities taking place within the region and the producers within the cluster enjoy them without paying high costs and vigorous activity. The developmental factors include those activities done by the external factor (state) to enable the enterprises within a cluster. The activities within Khuzestan Date Cluster are networking, institutionalization, and training. According to the results, there is a positive and significant relationship between cluster factors (structural and developmental factors) and world class manufacturing; that is, with the increase of the effective factors of cluster on date enterprises, the access to world class manufacturing increases, and vice versa. Meanwhile, developmental factors have greater positive effects. Abstract 2 Safavi and Bagheri
... The recent literature on clusters and industrial districts stresses 2 For a review see Karaev et al. (2007). 3 Rosenfeld (1997), page 10. both the geographic dimension of the firms' relationships, but also takes into account the role of the social infrastructure and the larger industrial system, going beyond mere spatial and sectoral proximity (Maskell 2005, Belleflamme et al. 2000, Soubeyran and J.-F. Thisse 1999. ...
... The constraints of micro and small enterprises, including shortage of financial resources, lack of time, lack of market information, and marketing expertise are the main reasons for the failure of these enterprises (Nwankwo & Gbadamosi, 2010). In most cases, micro and small enterprises cannot grab market opportunities individually, because this needs large-scale production, standard quality products at reasonable prices, continuous supply, and after-sales service (Belleflamme, Picard, & Thisse, 2000). ...
Article
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ne of the effective strategies for economic development of clusters is the conduct of networking activities by cluster members. Indeed, the majority of cluster members are micro and small enterprises, so, should attempt to overcome their inherent constraints and influence the market through networking activities. In addition, these enterprises lack an intra-firm research and development unit due to their limited financial and knowledge resources. Therefore, the execution of improvement projects by the BDSs situated in clusters plays an undeniable role in the development of clusters. Given the important role of networking activities and improvement projects in the economic development of industrial clusters, this study aims to investigate the efficiency of Iranian agricultural clusters in using these two important input factors, namely networking activities and improvement projects. In this regard, the final outputs, including the total sales and employment rates will be examined so that some strategies and guidelines can be offered to policy makers for the development of these clusters. DEA has been used to evaluate the effectiveness of networking activities and improvement projects in the performance of the six Iranian agricultural clusters under study. Based on the results obtained from the analyses, some solutions were suggested to promote the effectiveness of networking activities and improvement projects.
... With regard to local and territorial economies, Pecqueur (2000), Baptista and Peter Swann (1999), Belleflamme, Picard and Thisse (2000), Benko and Lipietz (2000), Demazière (1996), Englmann and Walz (1995), Greffe (1992), Vachon (2000), and Zimmermann (2002) all defined territory not as a neutral support but rather as a highly specific driving force. Longhi and Spindler (2000) saw local development as a "rising movement […] based on the mobilization of the actors in a given geographic zone, all of whom desire to take charge of their future through autonomous projects." ...
... A number of theoretical models describe how spillovers between firms shape the geography of production and innovation. They combine two different strands of literature: the theory of locational choice and the economics of innovation, dealing with spatial competition following Hotelling (Biscaia and Mota, 2012;Belleflamme et al., 2000;Gersbach and Schmutzler, 1999) or Cournot (Van Long and Soubeyran, 1998). Mai and Peng (1999) introduce cooperation between firms into the Hotelling spatial competition model in the form of innovation exchange through communication. ...
Article
This paper investigates the organization and the distribution of research activities between nearby public and private laboratories. In a three-stage game, the 'size', 'locationprime and 'research effortprime are determined under the assumption that public spillovers depend on the location of the private laboratory. We compare two scenarios in which the research efforts are decided either cooperatively or non-cooperatively. We show that for particular levels of subsidy granted to the public lab, higher funding favours spatial proximity and increases the total research effort in the cooperative case, while it diminishes the total effort in the non-cooperative one. Moreover, compared with the non-cooperative case, research cooperation: (i) may increase the distance between the two laboratories; (ii) makes the public laboratory smaller; (iii) increases the total research effort; but (iv) is detrimental to the payoff of the whole research sector.
... 15 According to Porter (1998), the formation of an industrial cluster depends on the relative strength of three forces of localization economies, price competition, and transport costs. Belleflamme et al. (2000) analyzed the emergence of asymmetric cluster by factors of localization economies and the dispersion forces generated by market competition. Fujita and Thisse (2013, p.350 ) also point out that firms must be able to serve almost all markets equally to enjoy the local advantages associated with the formation of a cluster. ...
Article
In this paper, we will take the concepts of Porter’s (On competition. Harvard Business School Press, Cambridge, 1998, Econ Dev Q 14(1):15–34, 2000) clusters and present an analysis of the feasibility of economic development in Japanese disaster regions under rapid population decline, utilizing two new industry clusters with innovation. The two clusters used are the automobile industry cluster, which targets the entire disaster region and whereby innovation comes from coagglomeration with different industries in mega-regions, and the food industry cluster, which target individual disaster-struck prefectures, focusing on their leveraging of local resources. This paper applies the dynamic two-regional computable general equilibrium model. We construct scenarios for each of these two clusters, and evaluate each new industry cluster model’s economic effects on disaster regions. A simulation analysis for scenarios of these two new clusters with positive and higher productivity in the coagglomerated industries reveals the following two effects: (1) that economies of agglomeration attained from vertical and horizontal coagglomeration have the effect of boosting real GRP and productivity on the macro level when the two new industry clusters are formed jointly rather than individually, and (2) that they contribute to long-term sustained growth in disaster region economies, reducing the gap between their growth and that of other regional economies. This can be interpreted to mean that the usual policies adopted, such as subsidies and corporate tax cut policies, are unable to counteract economic stagnation that comes as a result of a sharp decline for population numbers in disaster regions; it offers a conclusion that the agglomeration externalities seen from improved productivity in the formation of the new food/automobile industry clusters can offer sustained economic development in disaster regions.
... Some theoretical models examine how spillovers between firms shape the geography of production and innovation. They combine two different strands of literature: the theory of locational choice and the economics of innovation, dealing with spatial competitionà la Hotelling (Biscaia and Mota, 2012;Belleflamme et al., 2000;Gersbach and Schmutzler, 1999) orà la Cournot (Van Long and Soubeyran, 1998). Mai and Peng (1999) introduce the element of cooperation between firms in the form of innovation exchange through communication into the Hotelling spatial competition model. ...
Article
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URL des Documents de travail : http://centredeconomiesorbonne.niv-paris1.fr/documents-de-travail/
... Leséconomies externes marshalliennes, premières explications des causes de la localisation industrielle, indiquent qu'il existe des gainsà la concentration des activités sur un espace donné. L'économiste François Perroux (1957) s'en inspire pour développer sa théorie des pôles de croissance, théorie qui a servi de fondementà la politique française de développement régional durant les trente glorieuses (Belleflamme et al., 2000). Selon cette typologie, les externalités de Marshall sont des externalités de localisation. ...
Article
The theoretical framework of this thesis is the industrial economics applied to the analysis of technological innovation. Its main purpose is to assess the effects of competitiveness clusters policy on the incentives of firms to innovate. In particular, it aims to understand the informational mechanisms by which this new industrial policy impacts the levels of R&D investment of firms and their activities. The first chapter presents the general framework of the thesis and explains the elements of economic theory underlying the emergence of R&D based-clusters. The second chapter, our first theoretical contribution, analyzes the effects of clusters on R&D investments of firms which cooperate at the R&D stage and compete a la Cournot on product market in a two-stage game. The third chapter, our second theoretical contribution, focuses on the effects of the cluster in vertical relationship between a supplier of technology and integrators. The fourth chapter is intended to and illustrations for the theoretical results through informations gathered from actors of competitiveness clusters, specially in the case of Minalogic at Grenoble (Isere France).
... Estas externalidades incluyen "obtener" beneficios de la cooperación entre empresas y la interacción social, recursos humanos especializados y proveedores, difusión de conocimientos, y el aprendizaje derivado de la interacción cercana con clientes y proveedores especializados. La literatura reciente sobre clusters y distritos industriales destaca la dimensión geográfica de las relaciones de las empresas, pero también tiene en cuenta el papel de la infraestructura social y el sistema industrial en que se engloban, yendo más allá de la mera proximidad espacial y sectorial (Maskell, 2005;Belleflamme et al., 2000;Soubeyran y Thisse, 1999). ...
Article
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Este trabajo estudia el papel de los clusters industriales para fomentar la innovación regional y la cohesión económica en Europa. A partir de una visión de conjunto de los clusters industriales en la UE, en la que se destacan las fortalezas y debilidades de las aglomeraciones de empresas, investigamos empíricamente la forma en que los clusters y las características regionales afectan a la inversión en I+D y al output de innovación y, asimismo, investigamos el papel que desempeñan en el impulso de la cohesión económica. Encontramos que la existencia y el tamaño de los clusters regionales fomentan de manera significativa la innovación regional en Europa. Sin embargo, tiene importancia la industria en la que se especializan las distintas regiones. En particular, la especialización en clusters de tecnología media-alta y alta parece crear un entorno más favorable para la innovación y la I+D. Por último, la presencia de clusters en una región se asocia positivamente con mayores niveles de empleo.
... But for some authors, the concept remains weak, unclear and failed because unable to build strong empirical evidences about the relationship between 'learning' and 'regional development' (see MacKinnon et al., 2002). 8 Urban economists distinguish two types of agglomeration externalities: urbanization externalities that refer to the simple co-location of firms without their activities are connected and localisation externalities that are reserved to companies whose activities are similar or complementary (Belleflamme et al., 2000) 'According to this typology, Marshall externalities are localisation externalities. 9 ...
... Jay-Rayon et Coquereau (1985) Hautbois et al. (2009) ont même constaté qu'en France ces dimensions ont plus de poids dans le développement des activités de plein air que l'intervention du secteur public lui-même. L'ensemble des dimensions (sociale, spatiale, économique, culturelle et politique) d'un espace territorial doit d'une part être considéré à titre de forces motrices (Baptista et Peter Swann, 1999;Belleflamme, Picard et Thisse, 2000;Benko et Lipietz, 2000;Demazière, 1996;Englmann & Walz, 1995;cités dans Hautbois et al., 2009;Pecqueur, 2000) et d'autre part à titre de sources d'informations. ...
Article
Over the past 40 years, outdoor recreation research has developed a solid theoretical foundation that has allowed a better understanding of this field of study. This theoretical base has also allowed the development of conceptual models that have lent a fascinating intellectual framework to outdoor recreation research. Between 1978 and 2017, Loisir et Société/Society and Leisure published more than 960 articles; of these, 64 were related to outdoor recreation. These articles have illustrated the evolution and maturation of research in outdoor recreation. This can be observed through the evolution of the articles’ theoretical and conceptual frameworks, methodological approaches and themes studied. In addition, the various themes and frameworks can be grouped under three essential dimensions of outdoor recreation research : nature and territory, human and “human” activities, and sustainable development of resources. All the dimensions, issues and trends have an impact on the research, management and development of outdoor recreation.
... Papers that use the LQ model includeBelleflamme, Picard and Thisse (2000),Nocke (2006),Foster, Haltiwanger and Syverson (2008) andDhingra (2013).Property of Edward Elgar Publishing Ltd. Unauthorised copying or distribution is prohibited -Jacques-François Thisse 18.4.18 ...
... But for some authors, the concept remains weak, unclear and failed because unable to build strong empirical evidences about the relationship between 'learning' and 'regional development' (see MacKinnon et al., 2002). 8 Urban economists distinguish two types of agglomeration externalities: urbanization externalities that refer to the simple co-location of firms without their activities are connected and localisation externalities that are reserved to companies whose activities are similar or complementary (Belleflamme et al., 2000) 'According to this typology, Marshall externalities are localisation externalities. 9 ...
... Une seconde formulation, généralement plus utilisée par les économistes, définit cette fois-ci un cluster comme "une concentration, partielle ou totale, d'entreprises, dans une région spécifique, qui tirent avantage de la présence les unes des autres". Cette seconde définition, proposée par Belleflamme et al. (2000), met ici plus particulièrement l'accent sur la collaboration des membres du pôle et les effets de spillovers, argument théorique de l'existence des clusters (cf Chapitre 1). De nombreux auteurs, (Jaffe, 1989;Jaffe et al., 1993;Audretsch and Feldman, 2004), ont en effet établi que la localisation des externalités de connaissances constitue le principal déterminant de la localisation des activités innovantes. ...
Thesis
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Partant d’un manque de consensus académique quant à l’efficacité des différents dispositifs de soutien à l’innovation, cette thèse s’intéresse aux politiques de financement de la R&D dans un contexte où les entreprises peuvent coordonner leurs effortsde R&D et se rapprocher d’un secteur public de la recherche. Dans une première partie, nous présentons des éléments de la littérature économique sur les mesures incitatives de promotion de la R&D. Nous choisissons par ailleurs de contextualiser notre approche autour de la politique des pôles de compétitivité menée en France. Dans une seconde partie, nous proposons une modélisation théorique originale, à même d’étudier conjointement trois instruments publics de soutien à la R&D : encouragement aux stratégies coopératives de R&D, soutien financier à la R&D privée et soutien financier au secteur public de la recherche. Nos résultats théoriques nous permettent ainsi de proposer plusieurs recommandations de politique publique. Premièrement, nous mettons en avant le rejet de tout effet d’éviction de l’intervention publique sur les activités privées de recherche. Nous montrons également qu’une politique de financement d’un secteur public de la recherche peut représenter unealternative efficace à la politique visant à soutenir la R&D privée, sous condition que la recherche publique génère d’importants effets de débordement. Enfin, la répartition optimale du budget public destiné au soutien à l’innovation s’avère êtreplus généreuse envers le secteur public à mesure que les entreprises privées se situent à proximité de l’acteur public de la recherche. A l’inverse, le soutien public à l’innovation doit se faire davantage en faveur des entreprises privées à mesure que ces dernières sont soumises à une concurrence forte et à des difficultés d’appropriation de leur recherche.
... Indeed, a strand of literature is growing that targets a narrower geographical region in the countrycity or district and uses nighttime lights for quantifying various social and economic indicators at this level. The research topics covered at this level are plenty but drawing inferences f rom NTL about measurement and dynamics of urbanization stands out-see The focus of available economics literature and this study on the urban clusters is due to the immense economic potential of cities. Belleflamme et al., (2000) underscore the traditional division of these gains into two: ones resulting f rom the production of similar goods by f irms locating nearby -localization economies; and ones coming f rom conducting overall economic activity in a specif ic geographic area - ...
Technical Report
Sustainable Energy and Economic Development (SEED) is a £37.5 million programme funded and managed by the UK’s Foreign Commonwealth and Development Office (FCDO). The first component - Improved Economic and Urban Planning in Khyber Pakhtunkhwa (KP) – with a budget of £15 million, is delivered by Adam Smith International (ASI). The SEED programme, in close collaboration with the Government of Khyber Pakhtunkhwa (GoKP), aims to improve economic and urban planning in Khyber Pakhtunkhwa (KP) to help the province plan and finance investments needs for growth, jobs, and prosperity. This nightlights study has been undertaken in collaboration with and using support from, the Regional Accounts Wing at the KP Bureau of Statistics.
... There is a broad discussion in the literature about the advantages of being located within a cluster. Several studies point out how firms benefit from the unique mix of collaboration and competition, as well as from complementary goods or technologies present in the region (Porter, 1998(Porter, , 2000Belleflamme et al., 2000). In their study on innovative activities in the UK, Baptista 3 & Swann (1998), show that firms located in clusters (high regional employment in own sector) are more innovative. ...
Preprint
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Cluster policies aim at improving collaboration between co-located actors to address systemic failures. As yet, cluster policy evaluations are mainly concerned with effects on firm performance. Some recent studies move to the system level by assessing how the structure of actor-based knowledge networks is affected by such policies. We continue in that direction and analyze how technology-based regional knowledge spaces structurally respond to the introduction of a cluster policy. Taking the example of the German BioRegio contest, we examine how such knowledge spaces in winning and non-winning regions evolved before, during and after the policy. Using a difference-in-differences approach, we identify treatment effects of increased knowledge space embeddedness of biotechnology only in the post-treatment period. Our findings imply that cluster policies can have long-term structural effects typically not accounted for in policy evaluations.
... With regard to local and territorial economies, Pecqueur (2000), Baptista and Peter Swann (1999), Belleflamme, Picard and Thisse (2000), Benko and Lipietz (2000), Demazière (1996), Englmann and Walz (1995), Greffe (1992), Vachon (2000), and Zimmermann (2002) all defined territory not as a neutral support but rather as a highly specific driving force. Longhi and Spindler (2000) saw local development as a "rising movement […] based on the mobilization of the actors in a given geographic zone, all of whom desire to take charge of their future through autonomous projects." ...
Article
Outdoor recreational and leisure activities are practiced at a variety of scales throughout much of today’s world. The spatial organization of these practices nevertheless demonstrates very striking geographic disparities. The territory in which outdoor activities take place is far more than a mere framework or an inert support for these activities. It is instead a factor in their coproduction. Thus, the key actors in each territory mobilize the local resources differently. This study is situated within the theoretical framework of the territorial economy, according to which each territory is responsible for finding its own means of development. From this perspective, we analyzed and compared the territorial resources mobilized by the actors in each of France’s 96 continental departments (the department being the territorial unit defined for this research) in their quest to develop an outdoor recreation area. In our typological approach, four variables (further broken down into secondary criteria) were assessed : public sector input, the capacity of the economic structure to support the outdoor recreation sector, the presence of an outdoor culture and appropriate social networks, and natural and environmental resources. Correlations and regularities were observed, which are discussed in terms of the differentiated expansion of these activities in France.
... The ‚black box‛ firm is the neoclassical theory's focus, based on supposedly full information and ability to maximize individual aspirations, coupled with decisions based solely on interpretive models of lowering operating costs. All the variants of neoclassical approach, both old and modern, have common theoretical root which combines, on the one hand, mechanistic microeconomics, where the enterprise is perceived as static and timeless transformer of output inflows and without any strategic perspective and, on the other hand, national inward-looking traditional macroeconomics, where the individual macroeconomic phenomena are rarely linked to transnational and deeper socioeconomic or institutional perspectives and interpretations (Belleflamme, Picard, & Thisse, 2000;Boschma, 2015;Henderson & Thisse, 2008). ...
Book
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This volume—which is a collection of published articles by the “Stra.Tech.Man Lab” research team—focuses on and examines the dynamics of local systems as the principal contributors to overall socioeconomic development. Our goal is to clarify that local development is a phenomenon that goes beyond the traditional regional analysis and the “conventional” neoclassical theorization of maximization; the dynamics of local development seems to belong in the evolutionary socioeconomic science. The evolutionary and trans-disciplinary approach to local development dynamics focuses on the examination of local-level phenomena while seeking to comprehend how local systems (local innovation environments, local business ecosystems, local clusters) shape their potential of innovation and competitiveness. In our perspective, the scientific discipline of local development studies how socioeconomic systems in today’s era of globalization innovate and compete in their different spatial articulations.
... VALENTYN VELYCHKO 1 ABSTRACT. The article is devoted to the spatial structure reform in the Chinese cultural (creative) industries. ...
... The dominant view is that regional agglomerations trigger the formation of knowledge externalities, which stimulate interactive learning and innovation, and encourage the establishment of region-specific paths of knowledge and technology development. Such externalities have been attributed to the intensity of R&D activities within a territory (Belleflamme, Picard, & Thisse, 2000;Malmberg & Maskell, 2002;Porter, 2000), to the various levels of collaboration between firms, buyers, suppliers, competitors, universities or research labs embedded in a city or region (Breschi & Lissoni, 2011;Malerba, 2000), and to the science and technology policy measures driving territorial governance (Cooke, Uranga, & Etxebarria, 1998). These different approaches have each shed light on the main characteristics of local knowledge creation processes. ...
... The dominant view is that regional agglomerations trigger the formation of knowledge externalities, which stimulate interactive learning and innovation, and encourage the establishment of region-specific paths of knowledge and technology development. Such externalities have been attributed, for example, to the intensity of R&D efforts within an agglomeration (Belleflamme et al., 2000;Porter, 2000;Malmberg and Maskell, 2002), to the various levels of collaboration between firms, buyers, suppliers, competitors, universities or research labs embedded in a city or region (Zucker et al., 1998;Breschi and Malerba, 2005), and to the science and technology policy measures driving territorial governance , Laranja et al., 2008. These different approaches have each shed light on different characteristics of local knowledge creation processes. ...
Article
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This article aims to clarify how epistemic communities dynamically shape the process of knowledge creation in a localized context and how the evolving interaction between different members of these communities enables knowledge to transit from its locus of emergence to the global market. It is argued that these dynamics rest on a series of clashes between different frames of reference, which enables bits of knowledge to be progressively revealed, enhanced, nurtured, interpreted and enacted collectively.
... In reply to the globalisation of competition, and the need to gain benefits of scale by responding to international demand, firms can extend the geographic scope of their external linkages (Nachum and Keeble, 2003). Admitting this, it is worth to recall the study of Belleflamme et al. (2000). They support more traditional conclusions and suggest that that local agglomeration is even more likely to occur in the global economy. ...
Article
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The aim of the paper is to examine the effects of clustering industrial activity in some selected regions of Poland. As theoretical considerations suggest, industrial clusters understood as concentration of specific kinds of industry in particular locations generate some positive externalities. The companies belonging to those industries may benefit from the fact that they are spatially concentrated. Globalisation creates conditions, under which those externalities may be especially important. To determine the existence of such externalities, the data on industrial value added per working person, GDP per capita and GDP growth was used as indicators of the condition of economy in particular area (NUTS 3 level). Then it was confronted with the results of own research on industrial clusters to determine whether the latter may be a source of competitive advantage of the area. The existing studies dealing with industrial clusters mainly use case study method or quantitative approach based on one particular cluster. In this paper, a more general approach is used and it tries to identify the influence of clusters on economies on a broader level. The results show, that on one hand, no connection between cluster creating and value added was revealed, on the other hand, the connection with both GDP per capita and GDP growth was shown.
... The "black box" business is the neoclassical theory's focus, based on supposedly full information and ability to maximize individual aspirations, coupled with decisions based solely on interpretive models of lowering operating costs. All the variants of neoclassical approach, both old and modern, have common theoretical root which combines, on the one hand, mechanistic microeconomics, where the enterprise is perceived as static and timeless transformer of output inflows and without any strategic perspective and, on the other hand, national inward-looking traditional macroeconomics, where the individual macroeconomic phenomena are rarely linked to transnational and deeper socioeconomic or institutional perspectives and interpretations (Belleflamme, Picard, & Thisse, 2000;R. Boschma, 2015;Henderson & Thisse, 2008). ...
Article
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The conventional and traditional regional analysis seems to gradually changing focus, content and hermeneutic optic. The regional analysis of past seems increasingly saturated, being incapable to interpret and propose policy solutions that originate primarily from the potential of local development, innovation and entrepreneurship. To this end, new, multidisciplinary approaches of local development seem to prevail progressively, leading the study of development to the analysis of dynamically evolving localities.
Article
Surat zari industry is one of the oldest industries in Surat (Gujarat state in the western part of India) dating back to the sixteenth century. It enjoys the status of cottage industry since 1955. Zari is an intermediate product broadly catering to two end-user industries—textiles industry including handicrafts and the fashion industry. It is largely a family-owned, community-based, skilled-oriented, fragmented industry, with a very low level of automation, experiencing intensive rivalry. Zari making involves a series of inter-related closely guarded processes, which are passed on from generation to generation. Some of the issues and challenges that the industry is facing today are related to the traditional mindset of the entrepreneurs, quality, lack of standardization of processes and marketing. The paper discusses the possible strategic interventions as also the cluster approach to enhance competitiveness of the industry.
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Los clusters regionales con frecuencia representan un activo económico de primer orden por su capacidad de potenciar la eficiencia de las empresas y de atraer inversión. Muchos países europeos intentan aplica políticas de clusters pero la variedad de situaciones y, sobretodo, la fragmentación de enfoques analiticos, dificulta el avance en el conocimiento de las fuerzas fundamentales que operan en los clusters y en cómo manejarlas. En este artículo se identifican algunas líneas teóricas que podrían dotar de mayor rigor analítico los estudios de caso, y mejorar así las políticas de clusters.
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The purpose of this study was to investigate the influence of financial policies on the profitability of Micro and Small Enterprises in the Agricultural Industry in Eldoret Town, Kenya. This was in light of the fact that MSEs are not able to expand horizontally and vertically due to the negative impact that the policies have on them interms of enforced tax compliances and toxic loans. The study adopted cross-sectional survey design. The target population was 674 SMEs in Kipkenyo, Racecourse, Kapsoya wards in Eldoret Town. Out of the 251 sample size, data was collected from 250 MSEs only. Questionnaire were used to collect data which were analysed by editing the information gathered followed by coding and entering them for analysis. Validity was ensured through constructive criticism and revision by the supervisors while reliability was found to be 0.85. The research study result showed that there was no significant correlation between interest rates and taxation policies on the profitability of MSEs,(r=-0.963, p=0.173 and r=0.139, p=0.06) respectively, the financial policies influenced their profitability marginally. Similarly, there was no significant relationship between credit policy and profitability (Z=1.00, p=0.317). The researcher recommended that the governments and the financial institutions should revise their financial policies on the MSE
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In this paper, we consider the role of inequality-based entry barriers on the formation of female-owned firms in Nigeria. With data from the 2010 World Enterprise Survey, we estimate the parameters of a simple model of female-owned firm entry to determine the role of inequality-based barriers on the number of female-owned firms across city-industry clusters in Nigeria. Parameter estimates from count data specifications of firm entry reveal that access to financing, land, and licenses/permits absolutely deter the entry of female-owned firms, as these entry barriers are proportional to the probability of observing no female-owned firms. In general, barriers to securing land constrain the entry of female-owned firms beyond the process determining absolute entry deterrence. This suggests that the market entry and underrepresentation of female-owned among firm-owners and entrepreneurs in Nigeria is, at least in part, caused by gender inequality in general. As private firm output dominates the gross domestic product of modern economies, our findings suggest that the reduction of gender inequality in Sub-Saharan Africa would result in more female-owned and entrepreneurs which would catalyze economic growth.
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RESUMO A presente pesquisa tem por objetivo analisar como o processo de clusterização pôde influenciar o crescimento de pequenas empresas da indústria da cachaça do estado de Santa Catarina. Para tanto, realizou-se um estudo de caso coletivo com sete micro e pequenas produtoras de cachaça da região de Luiz Alves e uma empresa de outra região. Além disso, utilizou-se a pesquisa bibliográfica como forma de comparação dos resultados com outras localidades. A coleta de dados deu-se por meio de entrevistas e a análise por meio da técnica de análise de conteúdo. Observou-se que a atuação por meio dos recursos de cluster pode ampliar o crescimento das empresas em questão, principalmente pela percepção de qualidade a respeito dos produtos. Para ampliação das vantagens, ressalta-se a possibilidade de atuação de forma associada. Como contribuição teórica, nota-se que a abordagem da teoria de clusters pode ser aliada à teoria de crescimento da firma. Palavras-chave: Recursos de cluster; Crescimento de empresas; Cachaça; Concentração geográfica. 1 Doutorando em Administração pela Universidade Federal do Paraná – UFPR, Curitiba, (Brasil).
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Die Intensivierung des weltweiten Wettbewerbs erschwert für Unternehmen zunehmend eine klare Positionierung und Profilierung der eigenen Leistungen. Kooperationen bieten in diesem Zusammenhang in besonderer Weise Potenziale zur Generierung und Realisierung von Positionierungs-und Profilierungsvorteilen. Ein fruchtbares Feld für die Entwicklung und Realisierung von Kooperationen ist das regionale Cluster. Kooperative Lokalisierungsstrategien stehen dabei nicht im Widerspruch zu Internationalisierungsstrategien. Vielmehr kann beispielsweise eine gemeinsame Markenstrategie die Clusterakteure im internationalen Wettbewerb stärken und unterstützen. Verflechtungen der Einzelmarkenkonzepte der Clusterakteure ermöglichen im Ergebnis die Realisierung einer gemeinsamen regionalen Clustermarke. Durch den Bezug auf die Identität und die Stärken des regionalen Clusters in seiner Gesamtheit ergänzt die regionale Clustermarke die Einzelmarkenkonzepte der Akteure, ohne diese zu behindern. Der vorliegende Beitrag fokussiert auf die Fragen, inwiefern die Strategie der regionalen Clustermarke einen größeren Markterfolg ermöglichen kann und wie diese sinnvoll und realistisch umsetzbar ist. Darüber hinaus wird die Implementierung dieser Strategie am Beispiel der vogtländischen Musikinstrumentenhersteller erörtert.
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According to agglomeration theory, tourist attraction agglomeration can enhance the performance of tourism economy in a region. In contrast, industrial organization theory suggests that tourist attraction agglomeration can harm economic performance. This study examines the impact of tourist attraction agglomeration on a regional tourism economy using empirical evidence. China has experienced a proliferation of tourist attractions in the last 15 years. In 2000, only 590 A-class tourist attractions were part of the tourism market; however, by 2012, the number of A-class tourist attractions had increased to 6,042, providing a good opportunity for estimating the impact of agglomeration. The study results show a positive relationship between tourist attraction agglomeration and the performance of a regional tourism economy, suggesting that agglomeration theory holds up in the real world. Some implications for regional tourism planning and tourism development are derived.
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Using panel data from 225 cities in China over the 2002–2012 period along with dynamic panel data models, this study aims to quantify the impact of attraction agglomeration (AA) on the appeal of a destination at the macrolevel. The study results show that the agglomeration of natural and cultural attractions contributes to destination appeal in domestic tourism markets. The agglomeration of natural, cultural, and man-made attractions enhances destination appeal in international tourism markets. The agglomeration of cultural attractions has the most significant contribution in both domestic and international tourism markets. This study also demonstrates the lock-in effect of AA of a certain type, which means that diversification of attraction type will undermine the benefits of AA of a specific type. The results should help governments and industry organizations plan and develop regional tourism more effectively.
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This paper provides an empirical analysis of leading global multinational pharmaceutical and biotechnology firms with respect to technology agglomeration patterns, proximity to alliance partners and firm performance for the period 1996â€“2006. Our findings suggest that multinational pharmaceutical and biotechnology leaders are converging in terms of their technology agglomeration strategies; and increasingly competing over innovation from small biotechnology companies. Further, our analysis suggests that the absolute number of alliances is more than twice as important compared to proximity to partners in terms of firm performance defined as revenue, profitability and market valuation growth. Thus, for market leaders this study indicates a strategy of relentless pipeline building, with less regard to geographic proximity of alliance partners, appears to enhance relative and absolute performance of biopharmaceutical industry leaders.
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In any system of innovation, the constituency of participating individuals are central to determining its strengths and weaknesses. A fundamentally mobile resource, individuals are influenced by a complex nexus of factors prompting their movements. This title is a review of the literature on the topic and is designed as a resource for anyone interested in analysing human mobility and the factors and policies through which it influences innovation. It consists of three sections. The first provides a historical and theoretical background to the study of mobility and its relationship to innovative capacity. The second looks at the empirical measurement of mobility and evidence of its relationship to innovative performance. The third reviews policies used to affect the mobility of highly skilled individuals. Throughout the study, the focus is on the South African experience and its relation to the African and broader international experience.
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Empirical evidence shows that firms located in regions with larger population size are on average larger and more productive. To explain this empirical observation, firms producing intermediate goods are assumed to choose their technologies with different levels of fixed and marginal costs. In this general equilibrium model of economic geography, intermediate good producers engage in oligopolistic competition. The model is tractable and leads to interesting and analytical results. An intermediate good producer in the region with a higher population produces a higher level of output and has a lower marginal cost of production regardless of the existence of regional trade. With regional trade, if a worker moves from the region with a lower number of workers to the region with a higher number of workers, intermediate good producers in both regions choose less advanced technologies.
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Introduction. The intention of this work is to invetigate the probability of survival of the new companies created in the Medellín Industrial sector between the years 2000 and 2010. Also to highlight some determinants of the factors of success in the consolidation and acceptance of companies in the Market, in the time lapses immediately following their gestation. Objective. Calculate the cumulative survival rate of companies belonging to the Industrial sector of the city of Medellín created in the period between 2000 and 2010. Considering the size, legal nature and industrial sector to which it is circumscribed. Materials and methods. To account for the objective was used the survival function in a certain period shows the percentage of companies alive after a certain number of periods after their appearance. The risk function shows the percentage of companies closing t periods of time after its birth. Results. The risk of disappearance of a company decreases as the antiquity increases, additionally, is smaller in companies that are born with a larger or big size. The creation of companies is greater among the smaller ones, but present higher mortality rates in the first years of life. The survival of new companies is positively related to their size at birth.
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The Great East Japan Earthquake, which struck on March 11, 2011, had a massive economic impact, primarily on the affected areas in Japan. In this chapter, we examine the economic and human damage inflicted on Iwate, Miyagi, Fukushima, and Ibaraki Prefectures by the Great East Japan Earthquake, as well as the current situation of industrial recovery, based on several statistical sources and a geographically weighted regression (GWR) model. In the latter part of this chapter, we will show the extent of fiscal transfers to date from the government for reconstruction and renewal of stricken areas and analyze the economic effect of the formation of new industrial clusters for reconstruction and renewal on these areas using a static two-regional computable general equilibrium (2SCGE) model. Our findings are as follows: (1) if production subsidies to support industries form new industry clusters, positive effects on regional economies could appear in the disaster regions; however, these impacts are weak and (2) formation of new industry clusters with productivity improvement has a positive effect on real gross regional product (GRP) and economic welfare in these regions, reducing the economic welfare gap between disaster and non-disaster regions.
Thesis
Un nombre croissant d'organisations veut s'engager pleinement dans une pratique plus responsable des affaires, et tente de réformer profondément leur mode de fonctionnement. Pour ceux-ci, ce projet fait l’hypothèse que la société toute entière a le devoir de mettre en œuvre les mesures, attitudes et initiatives qui favoriseront le changement de comportement et de pratique. Alors que le public accroît son exigence quant à l’éthique associée aux produits qu’il consomme et que les gouvernements s’attellent à établir des limites réglementaires pour encadrer les pratiques, ce travail participe à apporter la contribution de la communauté académique en proposant des conseils aux organisations sur la façon de rompre avec les pratiques usuelles pour créer et s'approprier une stratégie d'entreprise qui intègre les paramètres de soutenabilité. À cette fin, il étudie comment les organisations peuvent intégrer efficacement les paramètres de soutenabilité dans leur stratégie d'entreprise, et identifie de nouvelles ressources, processus et incitateurs qui peuvent favoriser le changement vers une pratique plus responsable des affaires.
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Understanding cluster organization and dynamics first requires discussing the microeconomic factors that lead to the co-location of actors and the resulting uneven spatial distribution of economic activities. The common denominator of these approaches lies in the existence of different location externalities. Location externalities become relevant when the location choice of a given actor entails consequences of a different nature on the location choice of others. The key idea is that co-location benefits do not depend only on pure market interactions but also on the interplay of different location choice interdependencies. This explains why geography still matters in today’s globalized world, characterized by increasing market openness and decreasing transport and communication costs. Marshallian, network and informational externalities constitute competing and complementary theoretical tools which shed light on the microfoundations of clusters in modern economies.
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In the background of Industry 4.0, cluster can improve its performance by focusing its efforts and spending its resources on some vital factors called critical success factors (CSFs). Identification of these factors is essential for performance improvements of furniture cluster. This paper reviewed the literature on CSFs and various supporting philosophies of industry 4.0. The paper studied the impact of these factors through interaction with various stakeholders. Focused efforts on these CSFs may help in channelizing the resources and efforts of cluster in maximizing the gains through quality and productivity improvements. The researchers can access the impact of these factors by undertaking quantitative analysis. The cluster can improve its performance and gain competitive advantage by concentrating on these factors. It helps clusters in developing the use of effectiveness data in their decision making. This paper contributes to providing a better understanding of CSFs for improving the performance of furniture cluster.
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Mit dem hohen Stellenwert, der Clustern in der Innovations-, Struktur- und Wirtschaftspolitik seit den 1990er Jahren beigemessen wird, ging in vielen Regionen der Aufbau formaler Clustermanagementstrukturen einher (s. Kapitel 1). Da jedes Cluster einzigartig ist, gibt es kein universell gültiges Idealkonzept für das Management. Unbestritten ist jedoch, dass das Clustermanagement über die Steuerung einer Organisation hinausgeht und Funktionen wie die Aktivierung und Mobilisierung von Akteuren, die Stimulierung und Vermittlung von Interaktionen, die Bündelung von Wissen sowie die Initiierung von Lernprozessen umfasst.
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This last chapter summarizes the most important findings from the previous chapters of this book. It places emphasis on fragmentation and scatted decisions as likely sources of economic and social inefficiencies when externalities or interdependencies are present. Coordination, including government interventions, is underlined to be the means for re-establishing economic and social benefits. In this context, new technologies and especially ICTs can be important inputs for better coordination and enhancement of the levels of the overall social benefits. However, further research is needed to identify the levels of causality besides all the factors that influence the access to health, education, and socioeconomic outcomes in different contexts and situations. The economies in the South Mediterranean Countries (SMC), Middle East, and North Africa, besides the Arab countries are shown having to account for further interdependencies between health, education, and the socioeconomic situations. The roles and impacts of ICTs are found to be promising for the achievement of higher socioeconomic performances.
Article
This study examines the influence of firm cluster collaboration and the utilization of big data on the expansion of open innovation. We also investigate the effect of open innovation on business performance and test the moderating effect of social capital. We surveyed 409 global firms (193 large enterprises and 216 medium enterprises) located in Asia, Europe, North America, and Africa over a one-month period. We limited the scope of the survey to employees working at the level of team leader (or executive) or above in the R&D department. This study used SmartPLS (Version 3.3.3) to perform the statistical analysis. Our results indicated that, first, corporate cluster collaboration had a positive effect on the expansion of open innovation. Second, firm use of big data had a positive effect on the expansion of open innovation. Third, firm expansion of open innovation had a positive effect on business performance (market and financial performance). Fourth, in the relationship between cluster collaboration and open innovation expansion, social capital had a negative moderating effect. This research proved that cluster collaboration and big data could accelerate open innovation, ultimately improving business performance. However, there are limitations regarding SEM analysis.
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Traditionally, collaboration in logistics is created vertically between actors in a supply chain. Occasionally, the scope of collaboration has expanded to include public-private actors, i.e. horizontal collaboration. This thesis illustrates results from studies of regional logistics collaboration consisting of public-private participation, a phenomenon that is unfamiliar to the general practitioner of logistics. It illustrates capabilities developed by public and private actors in regional logistics networks and aspects of strategic processes. The results indicate that logistics capabilities generated by regional logistics collaboration can contribute to the competitiveness of firms and the attractiveness of regions. Empirical examples show that strategic capabilities can be developed in many ways, and in many layers of the logistics system. However, collaborating in a horizontal structure places great challenges before both public and private actors due to diversification of roles. Through means of action research, this thesis tries to identify some important aspects of regional logistics collaboration. The results show that there are great opportunities incorporated in road-rail intermodal transport services based on regional logistics collaboration. However, to develop logistics capabilities in a public-private, the union between the development of strategic goals/objectives and the level of commitment must be reciprocal in character through the elements of information exchange, trust and affinity.
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This paper uses data for eight manufacturing industries to test for and characterize dynamic production externalities in cities. The authors find evidence of both Marshall-Arrow-Romer (MAR) externalities, which are associated with past own industry employment concentration, and Jacobs externalities, which are associated with past diversity of local total employment. For mature capital goods industries, there is evidence of MAR externalities but none of Jacobs externalities. For new high-tech industries, there is evidence of Jacobs and MAR externalities. These findings are consistent with the notion that new industries prosper in large, diverse metropolitan areas but, with maturity, production decentralizes to smaller, more specialized cities. Copyright 1995 by University of Chicago Press.
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Using extensive data on 1970 and 1987 urban characteristics, the paper analyzes changes in employment in specific manufacturing industries in cities between 1970 and 1987. Two sets of questions are the focus. First, what present or past characteristics of a city's economic environment are critical in determining current employment levels in different industries? How much persistence in employment patterns is there over time and what is the source of that persistence? The second set of questions explores what inferences can be made from the data and results concerning the nature of externalities in urban markets, involving diversity of suppliers to firms, information spillovers concerning current market conditions and information spillovers involving the spread of technology. While the literature assumes employment levels in individual industries in individual cities show strong mean reversion ("convergence"), in fact that is not the case in the 1970-87 time period. The raw data show strong persistence. The major source of that persistence appears to be persistence in local demand conditions (i.e., persistence in regional comparative advantage), as opposed to other measured or unmeasured urban characteristics. Retention of employment is also strongly helped by the historical degree of local specialization in the industry, perhaps indicating a form of dynamic externality. Other historical conditions are not important.
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[eng] Transportation costs and monopoly location in presence of regional disparities. . This article aims at analysing the impact of the level of transportation costs on the location choice of a monopolist. We consider two asymmetric regions. The heterogeneity of space lies in both regional incomes and population sizes: the first region is endowed with wide income spreads allocated among few consumers whereas the second one is highly populated however not as wealthy. Among the results, we show that a low transportation costs induces the firm to exploit size effects through locating in the most populated region. Moreover, a small transport cost decrease may induce a net welfare loss, thus allowing for regional development policies which do not rely on inter-regional transportation infrastructures. cost decrease may induce a net welfare loss, thus allowing for regional development policies which do not rely on inter-regional transportation infrastructures. [fre] Cet article d�veloppe une statique comparative de l'impact de diff�rents sc�narios d'investissement (projet d'infrastructure conduisant � une baisse mod�r�e ou � une forte baisse du co�t de transport inter-r�gional) sur le choix de localisation d'une entreprise en situation de monopole, au sein d'un espace int�gr� compos� de deux r�gions aux populations et revenus h�t�rog�nes. La premi�re r�gion, faiblement peupl�e, pr�sente de fortes disparit�s de revenus, tandis que la seconde, plus homog�ne en termes de revenu, repr�sente un march� potentiel plus �tendu. On montre que l'h�t�rog�n�it� des revenus constitue la force dominante du mod�le lorsque le sc�nario d'investissement privil�gi� par les politiques publiques conduit � des gains substantiels du point de vue du co�t de transport entre les deux r�gions. L'effet de richesse, lorsqu'il est associ� � une forte disparit� des revenus, n'incite pas l'entreprise � exploiter son pouvoir de march� au d�triment de la r�gion l
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Article
This paper evaluates the argument that differences in physical and intangible capital can account far the large international income differences that characterize the world economy today. The finding is that they cannot. Savings rate differences are of minor importance. What is all-important is total factor productivity (TFP). In addition, the paper presents industry evidence that TFPs differ across countries and time for reasons other than differences in the publicly available stock of technical knowledge. These findings lead me to conclude a theory of Tm is needed. This theory must account for differences in TFP that arise for reasons other than growth in the stock of technical knowledge.
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Whether diversity or specialization of economic activity better promotes technological change and subsequent economic growth has been the subject of a heated debate in the economics literature. The purpose of this paper is to consider the effect of the composition of economic activity on innovation. We test whether the specialization of economic activity within a narrow concentrated set of economic activities is more conducive to knowledge spillovers or if diversity, by bringing together complementary activities, better promotes innovation. The evidence provides considerable support for the diversity thesis but little support for the specialization thesis.
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Develops a model of non-monocentric urban land use, obtaining equilibrium land use patterns by taking the non-monocentric aspects of urban activity more explicitly into consideration.-P.Townroe
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The purpose of this article is twofold. First, we present an alternative model of agglomeration and trade that displays the main features of the recent economic geography literature while allowing for the derivation of analytical results by means of simple algebra. Second, we show how this framework can be used to permit (i) a welfare analysis of the agglomeration process, (ii) a full-fledged forward-looking analysis of the role of history and expectations in the emergence of economic clusters, and (iii) a simple analysis of the impact of urban costs on the spatial distribution of economic activities. Copyright Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association
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Compares the organization of regional economies, focusing on Silicon Valley's thriving regional network-based system and Route 128's declining independent firm-based system. The history of California's Silicon Valley and Massachusetts' Route 128 as centers of innovation in the electronics indistry is traced since the 1970s to show how their network organization contributed to their ability to adapt to international competition. Both regions faced crises in the 1980s, when the minicomputers produced in Route 128 were replaced by personal computers, and Japanese competitors took over Silicon Valley's market for semiconductor memory. However, while corporations in the Route 128 region operated by internalization, using policies of secrecy and company loyalty to guard innovation, Silicon Valley fully utilized horizontal communication and open labor markets in addition to policies of fierce competition among firms. As a result, and despite mounting competition, Silicon Valley generated triple the number of new jobs between 1975 and 1990, and the market value of its firms increased $25 billion from 1986 to 1990 while Route 128 firms increased only$1 billion for the same time period. From analysis of these regions, it is clear that innovation should be a collective process, most successful when institutional and social boundaries dividing firms are broken down. A thriving regional economy depends not just on the initiative of individual entrepreneurs, but on an embedded network of social, technical, and commercial relationships between firms and external organizations. With increasingly fragmented markets, regional interdependencies rely on consistently renewed formal and informal relationships, as well as public funding for education, research, and training. Local industrial systems built on regional networks tend to be more flexible and technologically dynamic than do hierarchical, independent firm-based systems in which innovation is isolated within the boundaries of corporations. (CJC)
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This is a study of the economics of development and urbanization. Its two principal themes are 1) that simple economic factors explain the spatial location of populations and industries in different countries at different times, and 2) that developing countries create crowded urban areas inadvertently by building large cities that draw people from the countryside who do not find the jobs they come seeking. It reports original theoretical and empirical research.
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The Theory of Industrial Organization is the first primary text to treat the new industrial organization at the advanced-undergraduate and graduate level. Rigorously analytical and filled with exercises coded to indicate level of difficulty, it provides a unified and modern treatment of the field with accessible models that are simplified to highlight robust economic ideas while working at an intuitive level. To aid students at different levels, each chapter is divided into a main text and supplementary section containing more advanced material. Each chapter opens with elementary models and builds on this base to incorporate current research in a coherent synthesis. Tirole begins with a background discussion of the theory of the firm. In part I he develops the modern theory of monopoly, addressing single product and multi product pricing, static and intertemporal price discrimination, quality choice, reputation, and vertical restraints. In part II, Tirole takes up strategic interaction between firms, starting with a novel treatment of the Bertrand-Cournot interdependent pricing problem. He studies how capacity constraints, repeated interaction, product positioning, advertising, and asymmetric information affect competition or tacit collusion. He then develops topics having to do with long term competition, including barriers to entry, contestability, exit, and research and development. He concludes with a "game theory user's manual" and a section of review exercises.
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This paper provides empirical evidence on the contributions of interindustry and interstate knowledge spillovers to the output and growth of state manufacturing industries. The work develops a method for detecting spillovers within the output equations of the Heckscher–Ohlin trade model. This method shows how knowledge spillovers can reverse the Heckscher–Ohlin patterns of comparative advantage. The findings indicate that knowledge spillovers across states are strong enough to reverse comparative advantage; however, knowledge spillovers across industries are not strong enough to reverse comparative advantage. The interstate knowledge spillovers are geographically localized and contribute substantially to state output and growth in manufactures.
Article
This paper develops a simple model that shows how a country can endogenously become differentiated into an industrialized "core" and an agricultural "periphery. " In order to realize scale economies while minimizing transport costs, manufacturing firms tend to locate in the region with larger demand, but the location of demand itself depends on the distribution of manufacturing. Emergence of a core-periphery pattern depends on transportation costs, economies of scale, and the share of manufacturing in national income. The study of economic geography-of the location of factors of production in space-occupies a relatively small part of standard economic analysis. International trade theory, in particular, conventionally treats nations as dimensionless points (and frequently assumes zero transportation costs between countries as well). Admittedly, models descended from von Thunen (1826) play an important role in urban studies, while Hotelling-type models of locational competition get a reasonable degree of attention in industrial organization. On the whole, however, it seems fair to say that the study of economic geography plays at best a marginal role in economic theory. On the face of it, this neglect is surprising. The facts of economic geography are surely among the most striking features of real-world economies, at least to laymen. For example, one of the most remarkable things about the United States is that in a generally sparsely populated country, much of whose land is fertile, the bulk of the population resides in a few clusters of metropolitan areas; a quarter of the inhabitants are crowded into a not especially inviting section of the East Coast. It has often been noted that nighttime satellite
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Incl. bibliographical notes and references, index, biographical note on the author
Article
Recent theories of economic growth, including those of P. Romer (1986, 1990), M. Porter (1990), and J. Jacobs (1969, 1984), have stressed the role of technological spillovers in generating growth. Because such knowledge spillovers are particularly effective in cities, where communication between people is more extensive, data on the growth of industries in different cities allow the authors to test some of these theories. Using a new data set on the growth of large industries in 170 U.S. cities between 1956 and 1987, they find that local competition and urban variety, but not regional specialization, encourage employment growth in industries. The evidence suggests that important knowledge spillovers might occur between rather than within industries. Copyright 1992 by University of Chicago Press.
Article
I. Introduction, 347. — II. Production functions and producer equilibrium, 352. — III. Demand functions and supply of labor, 356. — IV. Equilibrium under laissez-faire, 358. — V. Ideal output, 362. — VI. Taxes, bounties, and optimality rules, 366. — VII. Analysis in terms of consumers' surplus, 373. — VIII. Dynamic stability of the adjustment process, 381.
Article
Economic geography in an era of global competition poses a paradox. In theory, location should no longer be a source of competitive advantage. Open global markets, rapid transportation, and high-speed communications should allow any company to source any thing from any place at any time. But in practice, Michael Porter demonstrates, location remains central to competition. Today's economic map of the world is characterized by what Porter calls clusters: critical masses in one place of linked industries and institutions--from suppliers to universities to government agencies--that enjoy unusual competitive success in a particular field. The most famous example are found in Silicon Valley and Hollywood, but clusters dot the world's landscape. Porter explains how clusters affect competition in three broad ways: first, by increasing the productivity of companies based in the area; second, by driving the direction and pace of innovation; and third, by stimulating the formation of new businesses within the cluster. Geographic, cultural, and institutional proximity provides companies with special access, closer relationships, better information, powerful incentives, and other advantages that are difficult to tap from a distance. The more complex, knowledge-based, and dynamic the world economy becomes, the more this is true. Competitive advantage lies increasingly in local things--knowledge, relationships, and motivation--that distant rivals cannot replicate. Porter challenges the conventional wisdom about how companies should be configured, how institutions such as universities can contribute to competitive success, and how governments can promote economic development and prosperity.
Book
Since 1990 there has been a renaissance of theoretical and empirical work on the spatial aspects of the economy--that is, where economic activity occurs and why. Using new tools--in particular, modeling techniques developed to analyze industrial organization, international trade, and economic growth--this "new economic geography" has emerged as one of the most exciting areas of contemporary economics. The authors show how seemingly disparate models reflect a few basic themes, and in so doing they develop a common "grammar" for discussing a variety of issues. They show how a common approach that emphasizes the three-way interaction among increasing returns, transportation costs, and the movement of productive factors can be applied to a wide range of issues in urban, regional, and international economics. This book is the first to provide a sound and unified explanation of the existence of large economic agglomerations at various spatial scales.
Article
This paper evaluates the argument that differences in physical and intangible capital can account for the large international income differences that characterize the world economy today. The finding is that they cannot. Savings rate differences are of minor importance. What is all-important is total factor productivity (TFP). In addition, the paper presents industry evidence that TFPs differ across countries and time for reasons other than differences in the publicly available stock of technical knowledge. These findings lead the author to conclude a theory of TFP is needed. This theory must account for differences in TFP that arise for reasons other than growth in the stock of technical knowledge. Copyright 1998 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.
Article
This paper considers a model of oligopolistic competition and locational choice that incorporates the notion of regional industrial systems. Firms play a non cooperative game where the strategy set of firms is given by a set of existing industrial districts. Each firm is distinguished by its "stand alone" district-dependant marginal cost. However, if other firms locate in the same district, its stand alone cost is reduced by a factor that depends on the number of firms in the district. We show that the location game yields a Nash equilibrium in pure strategies.
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Marshallian districts are locales that accomodate a large number of small firms producing similar goods to be exported and benefit from the accumulation of know-how associated with workers residing there. We study the making of such districts by assuming that the cost function of a firm is a decreasing function of the total output produced in the [ast by the firms established in the locale.
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This paper develops a model of regional production networks based on localization economies. I consider an industry with two activities: one with location-specific external economies, the other with constant returns. Under autarky, localization economies imply the formation of an industry center. Agglomeration drives up wages in the center, causing the constant returns activity to disperse to outlying regions. Trade recreates the regional production network on a global scale. I apply the model to data from the Mexican apparel industry. Estimation results on Mexico's pre- and post-trade regional apparel wage structure are consistent with localization economies. Implications for the North American Free Trade Agreement (NAFTA) are discussed.
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Marshallian districts are locales that accommodate a large number of small firms producing similar goods to be exported and benefit from the accumulation of know-how associated with workers residing there. We study the making of such districts by assuming that the cost function of a firm is a decreasing function of the total output produced in the past by the firms established in the locale. The dynamics is described by a sequence of temporary equilibria in which firms equalize profits between locales at each period. Hence changing the spatial distribution of firms affects the production history of each district. When new firms set up in a locale, they exacerbate competition on the corresponding labor market, thus leading to a wage rise that reduces the incentives for firms to locate in the most efficient district. The short-run equilibrium distribution of firms is studied as well as the long-run properties of the adjustment process.
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This paper tackles the issue of optimum product diversity in an imperfectly competitive market with small or large firms. First, it develops a quadratic utility model of monopolistic competition with horizontal product differentiation which avoids some of the main pitfalls of the S-D-S approach. Second, it extends the model to the case of multiproduct firms showing how product diversity is affected with respect to monopolistic competition. In particular, it is shown that monopolistic competition with single-product firms is the limiting case of oligopolistic competition with multiproduct firms when either varieties gets more and more differentiated or when the entry cost goes further and further down.
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[eng] Transportation costs and monopoly location in presence of regional disparities. . This article aims at analysing the impact of the level of transportation costs on the location choice of a monopolist. We consider two asymmetric regions. The heterogeneity of space lies in both regional incomes and population sizes: the first region is endowed with wide income spreads allocated among few consumers whereas the second one is highly populated however not as wealthy. Among the results, we show that a low transportation costs induces the firm to exploit size effects through locating in the most populated region. Moreover, a small transport cost decrease may induce a net welfare loss, thus allowing for regional development policies which do not rely on inter-regional transportation infrastructures. cost decrease may induce a net welfare loss, thus allowing for regional development policies which do not rely on inter-regional transportation infrastructures. [fre] Cet article d�veloppe une statique comparative de l'impact de diff�rents sc�narios d'investissement (projet d'infrastructure conduisant � une baisse mod�r�e ou � une forte baisse du co�t de transport inter-r�gional) sur le choix de localisation d'une entreprise en situation de monopole, au sein d'un espace int�gr� compos� de deux r�gions aux populations et revenus h�t�rog�nes. La premi�re r�gion, faiblement peupl�e, pr�sente de fortes disparit�s de revenus, tandis que la seconde, plus homog�ne en termes de revenu, repr�sente un march� potentiel plus �tendu. On montre que l'h�t�rog�n�it� des revenus constitue la force dominante du mod�le lorsque le sc�nario d'investissement privil�gi� par les politiques publiques conduit � des gains substantiels du point de vue du co�t de transport entre les deux r�gions. L'effet de richesse, lorsqu'il est associ� � une forte disparit� des revenus, n'incite pas l'entreprise � exploiter son pouvoir de march� au d�triment de la r�gion l
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